Closing summary: Bitcoin futures fall as CME trading begins

Time for a recap.

Bitcoin has made a subdued debut onto the world’s largest futures exchange, as a series of politicians and officials voiced concerns about the digital currency.

The Chicago Mercantile Exchange (CME) became the second exchange to offer bitcoin derivatives trading last night. And right now, bitcoin futures contracts which settle in 2018 have all fallen below their opening value.

The January 2018 contract, which initially spiked over $20,000, has now dropped back to $18,920 - having been originally priced at $19,500.

Contracts that mature in February, March and June are all in the red (although they’ve received little attention compared to the January option).

Bitcoin futures: all down today Photograph: CME

Futures contracts allow traders to bet against an asset, so today’s moves could suggest that bitcoin’s stunning rally is running out of steam. But, less than 1,000 contracts have been traded today (each one is worth 5 bitcoins).

The spot price of bitcoin has also dipped, currently down 1.6% at $18,640 - having hit a new alltime high near $20,000 last night.

CME’s launch of bitcoin futures was accompanied by a series of warnings. For example:

ING cited bitcoin’s volatility, scalability issues, and the shadow of regulation among several reasons why it would not replace traditional cash.

So those buyers who are hoping to sell their bitcoins at an even higher price in the future may be disappointed, they say:

We are enthusiastic about blockchain technology, and the current attention for Bitcoin could boost blockchain and digital currencies’ development. But as we have argued above, we doubt whether Bitcoin itself has what it takes to become a serious mainstream payment systems contender. Instead, we think it is more likely for Bitcoin to return to its roots as a niche payment system. A niche asset adopted worldwide could still have a substantial user base and hence value. It is therefore impossible to say whether the current Bitcoin market price is “too high” for a niche asset.

Then again, we join the crowd of analysts observing typical bubble characteristics: the idea of an asset that is new, revolutionary, almost magic – hard to understand, but let’s invest anyway because it will become huge. This idea is a form of “this time it’s different”-thinking. “Yes we know about all those previous bubbles that popped, but Bitcoin is really, really different.” We are not so sure.

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European markets close higher

European stock markets have closed at their highest level in almost six weeks, following Wall Street’s lead.

The German Dax led the charge, gaining 1.6%, with France’s CAC and the Italian FTSE MIB both gaining 1.33%.

The UK lagged behind, with the FTSE 100 finishing 46 points higher at 7,537, up 0.6%. The Footsie was held back by the pound, which has gained almost a cent today to $1.34 (which is bad for exporters).

European stock markets tonight Photograph: Thomson Reuters

Fiona Cincotta, senior market analyst at City Index, says the City is anticipating a final deal on US tax cuts soon.

Risk on sentiment is driving trading, as investor optimism over the US tax bill being passed sooner rather than later is lifting stocks.

The 2 wavering Senators, which could have thrown the vote in the Senate slim majority are now back on side and the markets are cheering.

In Berlin, a Finance Ministry spokesman said it was watching “bitcoin and other cryptocurrency developments closely,” adding that Germany’s financial supervisor Bafin has already warned of the risks of cryptocurrencies for consumers.

Greek PM tells banks to crack down on bad debts

In Greece leftist prime minister Alexis Tsipras has urged banks to do more to clamp down on big time debtors, citing the banking system’s record stock of non-performing loans.

Helena Smith reports from Athens:

In a no-holds barred speech Tsipras told leading bankers today that the time had come to crack down on big-time debtors and strategic defaulters as part of efforts to restore liquidity to Greece’s cash-strapped economy.

Those who had allowed bad debt to bust businesses, but done well themselves, had to be “chased,” he told bank representatives assembled at his office, adding:

“Liquidity needs to be restored to the economy … We need a responsible and effective way to deal with the problem of non-performing loans.”

By failing to effectively deal with NPLs – of which Greece has the highest amount in the EU – and provide funding for others, he said, banks were failing to properly support young Greeks in fulfilling their dreams.

Describing the role of banks as crucial, the leftist leader also called for the creation of an “observatory” that could advise the government on what banks could offer. With less than a year before the debt-stricken country’s third international bailout officially expires – ending, it is hoped, an era of international supervision – the government is keen to improve daily life.

On Friday the International Monetary Fund also cited bad debt as a major obstacle for Cypriot banks despite the island’s impressive economic recovery after its own crisis in 2013.

NPLs in Cypriot banks amount to 46% of loans -- after Greece the highest amount in the EU.

US stock markets hit record highs as tax reform looms

Over in New York, the US stock markets has hit fresh record highs at the start of trading.

The Dow Jones industrial average has jumped by 138 points, or 0.5%, to 24,790 points. The broader S&P 500 index is also up, while rallying tech stocks have sent the Nasdaq higher too.

The open of Wall Street today Photograph: Bloomberg TV

Investors are excited by the possibility that the US Congress might reach a final agreement on tax reforms. Those reforms have been heavily criticised by some experts, who fear it will drive up the US deficit and hand the richest Americans a tax cut.

So why is Wall Street celebrating? Because the bill will slash corporation tax, delivering a massive windfall to large corporations.

Analysts at FxPro say:

With the bill reducing corporation tax from 35% to 21%, there will be a windfall to US companies. With the possibility of share buy-backs and/or higher dividends by US Corporations, this will, in turn, increase the pace of interest rate hikes and see a stronger US dollar as a result.

The US Tax Bill will probably be voted on, pass and will turn up on the President’s desk this week . A significant boost to the economy? “Oh yes, it is” cries President Trump, who calls it ‘one of the great Christmas gifts’ to the middle class. “Oh no, it isn’t” answers the bond market, as 10yr Notes meander along at 2.37% this morning, and TIPS remain mid-range.

The bond market fell for the President’s policy promises this time last year and is resolutely unimpressed this time round. ‘Bah, Humbug’ sums it up (at the risk of mixing panto-metaphors).